By definition, the cost of tax evasion in terms of lost revenue to the UK Treasury is a figure which can only be the subject of an estimated guess.
What appears to be almost certain is that it runs into tens of billions of pounds, and as a result, dwarfs the relatively small-scale issue of benefit fraud, which has historically attracted a much more widespread level of stigma.
Statist commentators of course have been making this point for some time, applying a sort of immoral equivalence to the two.
Coming at the question from a starting position of ‘compulsory tax is theft’, this bunny is still able to make a distinction between taking something to which one was never entitled and refusing to hand over that which they were forced to by the state.
In short, they are not issues of the same principle, and although the law of the land is what it is, I invariably find a tad more sympathy for those who bob and weave the taxman than will ever be the case for the phoney disabled and what have you.
Moreover, if your activities lead you to wind up with that dreary shower of smugness Danny Alexander sermonising from the opposing corner, they would probably have to involve mass-murder for this bunny not to take your side.
The latest brainwave from Sandals and Muesli HQ is for a crack squad of 2,000 tax inspectors to seek out those who have failed to hand over a ‘fair share’ of their ill-gotten gains in the past:
“The impetus on this was not strong enough from the previous government so we’ve taken a whole lot of additional measures. We’ll be taking additional prosecutions against tax evasion where we identify that illegal activity; we’ll be investigating when measures are set up that are designed to avoid tax and close loopholes if that is necessary.”
Some might playfully conjure up images of ‘Elliott Ness times two thousand’ in their heads. quite valid given their likelihood of success.
A ‘crackdown’ on some of the most intelligent and creative (not to mention, most mobile) in our society will always be infinitely more difficult than catching some scrote pretending to be disabled – and the half-arsed job they’ve made of that hardly inspires much in the way of confidence.
The occasional Orange Booker aside, ‘Liberal’ Democrats have always possessed the Statist instinct that economic activity is primarily a means of raising revenue for the government.
One of the many slimy characteristics of the New Labour years was the manner in which they egged on the recklessness of the financial sector, thinking first and foremost of the tax windfalls that came from it. Any suggestion that the generation of wealth and jobs are just inherently good things does not enter their vocabulary.
On that note, how many jobs in the UK are facilitated by individuals who manage to slip away from the taxman relatively unscathed, be it through creative accountancy, offshore holdings or whatever else
What are the economic side effects of these people upping sticks and moving elsewhere?
And, like the 50p tax band, could this ‘crackdown’ simply end up being a piece of symbolic gesture politics that actually costs money?
This selective amnesia regarding how incentives drive human behaviour is thoroughly baffling. Statists place bucketloads of blind faith in the ability of green taxes in particular to bring the rest of us into line with the needs of their megalomania, while any suggestion that punitive taxation increases the scope and incentives for evasion or black economic activity simply does not compute.
There is of course a very simple way to reduce tax evasion while creating an altogether fairer system – take the least well-off out of tax altogether (that rarest of things, a sound LibDem policy) with a single flat rate above the increased threshold.
Naturally, we’d have to find savings to pay for all this in the short term, but laying off half of HMRC would be a start – it might also prove to be the most popular cut of all time. Take care and I’ll catch you soon.
http://outspokenrabbit.blogspot.com/
Daz Pearce is a Libertarian, Sports Fan and founder of the OutspokenRabbit blog. He has previously contributed to Football Italiano, A Different League and boxing-articles.com
{ 17 comments }
You know that, I know that – but we are talking politicians here…….
Also another obvious answer would be the introduction of a flat tax……?
I get the vague feeling that all the noise from politicians about cracking down on tax avoidence is just grandstanding. If tax law says it’s legal, no amount of tax inspectors are going to raise another penny for government – and there’s no obligation for anyone to pay any more tax than they are legally obliged to do.
Another obvious saving is the abolition of Tax Credits, and the simultaneous raising of the tax threshold.
For the life of me, I cannot understand the logic of paying one administration to take tax off the low paid, then paying another administration to give them some of it back because they can’t pay their bills. Just don’t take it off them in the first place.
You can be sure that the accountants and lawyers paid to find loopholes will always be smarter than those paid by the Government to close them.
It’s simply the need of politicians to look like they’re doing something, anything…and inevitably results in more useless jobs in the public sector.
There is of course a very simple way to reduce tax evasion while creating an altogether fairer system – take the least well-off out of tax altogether (that rarest of things, a sound LibDem policy) with a single flat rate above the increased threshold.
If I were made PM tomorrow, we’d have a green paper by Friday… I’m utterly amazed we haven’t had a political leader with the vision to offer a revenue model tailor made for the 21st Century.
John, the big stumbling block to that is the public sector workers. By doing something sensible you would cut the PS workforce by more than 50% and we can’t have that – the unions would get upset.
Too obvious for half-wit politicians.
And where is the punishment element?
Problem really is that taxes aren’t just about revenue; they’re about redistribution/envy and attempts at social engineering as well. Given the socialist nature of our main political parties, i.e. we know what’s best for you dear, and will tax accordingly, I see no change ahead.
I do think a great deal of simplification could be got from a much raised personal allowance and consequent lack of need for benefits. Would make work worthwhile too.
Think also about the community charge, rates in old money. This is a charge entirely for the monopoly provision of services, often inefficiently run in house. How can there be any reason to set the charge on the basis of wealth, as per yellow peril policy? Why should my bin emptying charge be related to anything but the cost of doing it?
The cost of collecting tax is about 50% of the revenue taken from the private sector. The public sector is even worse. The money collected from the Public Sector is simply a return to the treasury of money originally in their hands minus the 50% collection tariff for the HMRC to recollect it.
Simple changes.
Do not tax below 15k per year.
Pay Public Sector Net of Tax
1 Single Tax to cover all public services rather than inefficient collection mechanisms and organisations all round the country collecting different taxes for different reasons. Therefore controlling the fairness of the system based on a “Total Tax” payable.
Much of the tax collected by UK plc is used to pay for the Pensions in the Public Sector, the buildings, the staff salaries and benefits in non jobs.
Yes I do believe that people should pay their Fair Share but I do not believe we should be simply taxing the SME sector into oblivion to pay for housing/education/medical/services for immigrants, lazy fuckers and no contributors to society.
Eg. A soldier returning from Afghanistan injured in the service of his country in the Army is less likely to get a house than a Taliban fighter with a cock and bull story of oppression due to the points system based on needs rather than eligibility.
The main reason for tax avoidance is the huge gaps between tax-bands – approaching a new band makes the avoidance worth it.
If we had multitiple bands, each only 1% apart, each step would not justify the cost/effort of avoidance. It would also enable all earnings to be taxed, even the lowest, but at a trivial level, to establish the principle that everyone pays something.
So, anyone earning up to £10,000 would pay a token 1%.
Each additional £2,000 would then attract a marginal 1%
With a maximum of 50% (at around £110,000)
We have the technology now to calculate that instantly and accurately, but the effect would be the elimination of most avoidance for the vast majority of taxpayers.
The mega-rich will always avoid tax, because the Establishment will always let them, but the real value of what they dodge is minor compared to collecting all the tax from all the rest.
I guess that would be the same technology that worked so wonderfully well for the NHS!!!
I thought I’d written on this before and I had, here on annaraccoon.
……………………..
Gloria Smudd March 17, 2009 at 10:31
And seen in the papers today (17.03.09):
“HM Revenue & Customs (is) investigating explosive allegations about tax avoidance schemes operated by Barclays Bank, made by a whistleblower in the firm and apparently substantiated by leaked documents. HMRC’s moves came as the government announced steps to try to discourage tax avoidance by Britain’s banks, now frequently dependent on state aid. The chancellor launched plans for a code of practice in which banks would be expected to abide by the “spirit of the law”. Darling said the government had taken action against tax avoidance in every budget since 1997 but that, as soon as one loophole was closed, another opened up. “Partly because the very complexity of banking, the way in which, sometimes just investment banks and sometimes others have sought to develop instruments in order to avoid pay taxes has in itself posed a systemic threat to the system.” (from The Guardian website)
………….
Forensic accounting and all that. It was ever thus.
Hello, you snaggle-toothed, smart, sassy, siren! Your talk of forensic accounting is arousing me, would you care to inspect my ledger?
Oooer, Mr Thaddeus! Just the thought of a Double-Entry system is enough to make me fall into a wide feint …
I credit you with greater reserves than that, Gloria!
Are you bullion me?
Whilst many of the suggestions on tax reform have merit,there is little point in pursuing these ideas when we the head of HMRC is doing deals with corporations ie Vodaphone and billions not being paid that should,Private Eye have been following and reporting on this for some time in great detail and still it goes on .
There is something seriously wrong when large corporations can by “legal” means shovel their profits about the world to such a degree that they end up paying virtually nothing in this country despite trading here,like MP’s expenses ,an energy policy that suits big business and landowners,pension schemes that only seemto work for CEO’s, Mp’s again,hikes in all taxes that seem not benifit the parlous state of the country ,but are fed back to those who have never contributed or third world bottomless pits ,we are not all in this together its a two tier GB on almost every level.
Being a simple soul [and not having read everything in detail here ...] I say: do as the Swiss. The maximum I ever paid whilst I was there was 15% [I know of others with millions of a year's income who paid 25%] and as a result EVERYONE is paying taxes – no need to evade and big money into the coffers